Consultants often underprice by focusing on costs or hours instead of value delivered. New consultants especially undercut themselves to win projects, but this attracts worse clients and kills profit margins. Price based on what you deliver, not what you spent.
If pricing doesn't reflect the value that you're offering, it will affect your margins and the client quality and growth. And people have a lot of misconceptions on pricing. One is that pricing is about the value you offer to clients. It's not about how much something costs you or the number of hours you put into it. A lot of consultants, when they're starting out, they underprice, way underprice their services with the idea that I'm not that experienced, I don't have clients yet, so I'll just go as low as I can. So I can get that project, that client.
